Our Perspective END OF THE BULL RUN FOR MUNIS? - OCTOBER 2016 Strong Tax Exempt Fund Flows in 2016 Demand has been solid this year with a run of 54 weeks of positive mutual fund flows for a cumulative $60.2 billion that just recently ended. While muni fund flows have recently slowed to their lowest weekly total since last November, and have actually turned negative for tax exempt high yield funds, this is not uncommon for this time of year (see Exhibit 3). Stock market volatility, negative interest rates overseas, and the recent cheapening of muni/Treasury ratios are likely to continue to bring in crossover and foreign buyers into our asset class, which will help to somewhat mitigate the seasonal slowing of fund flows. Exhibit 3: Municipal fund flows: 4 week moving averages Source: Citi Research, Lipper The recent correction has presented a better buying opportunity after the summer’s strong market technical factors led to rich valuations that did not reflect the softening of domestic fundamental conditions. We have been upgrading our portfolios and raising cash over the past few months in anticipation of a fall seasonal correction and now plan to take advantage of the current cheap market conditions. Our call continues to be that long term rates will remain lower for longer, regardless of any possible Fed actions later this year.

As a result, we remain constructive on the municipal sector because of its tax exempt income, attractive Treasury ratios, and very compelling yields compared to other global fixed income rates. The assertions in this perspective are Seix Investment Advisors’ opinion. Investment Risks: All investments involve risk. Debt securities (bonds) offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return.

Generally, a portfolio’s fixed income securities will decrease in value if interest rates rise and vice versa. A portfolio’s income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax. There is no guarantee a specific investment strategy will be successful. This information and general market-related projections are based on information available at the time, are subject to change without notice, are for informational purposes only, are not intended as individual or specific advice, may not represent the opinions of the entire firm, and may not be relied upon for individual investing purposes.

Information provided is general and educational in nature, provided as general guidance on the subject covered, and is not intended to be authoritative. All information contained herein is believed to be correct, but accuracy cannot be guaranteed. This information may coincide or conflict with activities of the portfolio managers.

It is not intended to be, and should not be construed as investment, legal, estate planning, or tax advice. Seix Investment Advisors does not provide legal, estate planning or tax advice. Investors are advised to consult with their investment processional about their specific financial needs and goals before making any investment decisions. Past performance is not indicative of future results. ©2016 Seix Investment Advisors LLC.

Seix Investment Advisors is a registered investment adviser with the SEC and a member of the RidgeWorth Capital Management LLC network of investment firms. .